Rising stock markets, rising gold prices and falling bond yields: The influence of Jerome Powell's speech

Rising stock markets, rising gold prices and falling bond yields: The influence of Jerome Powell's speech

According to a report by finanzmarktwelt.de,
Stock markets and gold have been rising since 5 p.m. as Federal Reserve Chairman Jerome Powell gives a speech and reinforces expectations of falling interest rates. The 10-year Treasury yield is falling while gold and the stock market are rising. Powell signaled that the Federal Reserve may leave interest rates unchanged this month but reserved the right to raise rates further. The market view of rate cuts is reflected in the CME Fed Watch Tool, which forecasts a likely rate cut in March 2024 at 56.8%. Treasury yields fell, stock markets rose, and the dollar retreated. Swap contracts point to additional easing by the end of 2024. U.S. factory activity contracted for a 13th straight month in November, while inflation is on track to return to the Federal Reserve's 2% target.

These developments suggest that market participants are anticipating possible interest rate easing by the Federal Reserve. The prospect of falling interest rates could prompt investors to invest more in stocks and gold. Government bond prices are expected to continue to fall, while stocks and gold are expected to continue to rise. Reducing interest rates could also boost lending and stimulate economic activity. Nevertheless, the market should be cautious as unexpected events or data could affect the forecasts. It is important to note that unexpected events or new data could affect the forecasts. Positions should therefore be chosen with caution and taking into account current developments on the financial markets.